Case: Paramount Theater

Redevelopment of existing properties has become a larger part of the total real estate mix in recent years -- and will continue to be very important in our now "mature" economy -- especially in light of public concern about the environment – which often translate into a desire to re-use old buildings rather than create new ones. The case concerns a developer's effort to determine what re-use to make of an old, virtually abandoned theater in Charlottesville Virginia. Several possibilities have been identified -- with very different uses, plans, costs, and potential benefits.

The developer, Scott Kammeraad is uncertain how to proceed. Your task is to take the role of the Kammeraad, and to totally re-think and re-evaluate these opportunities -- and any others you can think of that may be better -- in order to make an immediate decision. Our prime focus will be on the mixed use oppoertunity -- and variations on it. As you prepare to discuss this situation, please consider such issues as:

• What is the nature of this property? What are its strengths and weaknesses for each potential use?  Do a full analysis of the mixed use opportunity.
• What kinds of information are still needed before you can make decisions about each use? Can you make good guesses on these points -- or do you have to get the precise information?
• Based on what you do know, what appears to be the best potential use -- other than just selling the property? What criteria are critical to making this the "Highest and Best Use"?  Does it make sense to choose the mixed use plan or a variation on it?
• Assuming the developer will proceed with this choice, what are the key steps involved -- from beginning to end?
• What are the economics of this plan? Please prepare the best pro-forma you can for a mixed use plan. I have not provided a sample spreadsheet as students choose such different solutions that it is not useful to do so.  Please feel free to be creative.  The Millegan and Portland spreadsheets can help with the details,
• What do we learn from this case about "Creative Re-use"? About the artistic/community responsibility of the developer? About the responsibility of the community to the developer?

Final Exam: Please submit a memo to Kammeraad containing a brief analysis -- 3 double-spaced pages maximum -- supporting your best version of a mixed use proposal -- and its implementation -- plus the relevant pro-forma and sensitivities. A DRAFT  will be due in class but will not be graded (unless the final is not submitted). Revised assumptions may be provided in class.

In class you may be given additional information and you will than revise and submit your analysis taking into account this new information and whatever you may have learned as a result of the class discussion.  Due 9 days after the class. The final needs to be submitted on time to get a timely grade.

Good Luck!